After ‘tough talks’, IMF places new demands before cash strapped Pakistan

The International Monetary Fund (IMF) has concluded its first round of “tough talks” with Pakistan and said that the Fund will share nine tables — comprising macroeconomic and fiscal framework — with the Pakistani authorities which will pave way for holding policy-level talks next week, reported Geo News.

If Pakistan and IMF reach a consensus by February 9, they will sign a staff-level agreement. The authorities have massively revised the macroeconomic framework and shared it with the IMF under which the real GDP growth is projected to slash from 5 % to 1.5 to 2 % while inflation is going to escalate from 12.5% to 29% on average in the current fiscal year, reported Geo News.

The visiting IMF team has pointed out that the nominal growth (real GDP growth rate plus CPI-based inflation) is projected to cross the 30% mark so the Federal Board of Revenue of Pakistan’s (FBR) tax-to-GDP ratio is bound to decline even if it achieves the envisaged annual tax collection target of 7,470 billion, reported Geo News.

An increase in the FBR’s tax collection target is on the cards but its exact level of additional taxation will be determined after receiving the nine tables worked out by the IMF mission. “The IMF’s prescription suggests the hardest choices on taxation and non-taxation fronts in order to fill the yawning fiscal gap. Different proposals are under consideration including jacking up petroleum levy by 20-30 per litre by maximising the limit from the existing level of 50 per litre to 70-80 per litre or slapping 17% GST on POL products or increasing the GST rate by 1% from 17 to 18% cent through a presidential ordinance,” sources confirmed while talking to The News International.

On other hand, the IMF has asked for slapping additional taxes on a qualitative, substantial and sustainable basis that should be done in an irreversible way. (ANI)